An in-depth analysis of how core services can reshape the financial services industry. 


Core & IT costs are expensive. If your bank is like most financial institutions, technology costs represents the second greatest non-interest expense behind personnel.

For the last five years, Core IT cost has grown more rapidly than non-interest expense and it is projected to continue well into the future. During this same period though, the importance of IT services and its role as a mission critical service and key strategy has skyrocketed.

Here’s the problem: executives in community banks and credit unions know they need to stay on top of the latest technologies both to optimize the efficiency of their internal operations and to satisfy the steadily shifting demands of their customers, but 89 percent are concerned about the costs.

And they have at least five good reasons to be worried:

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    The next 10-15 years will prove extremely challenging for smaller institutions as they face new challenges from customers, regulators, bigger competitors, nonbanks, shortages of qualified personnel, and a mobile generation that finds little value in the neighbor-to-neighbor services.

  • 75% of respondents expect a significant increase in mergers and
    acquisitions within the next two years. However, many discussions will come to a hard stop when the institutions look at the penalties and hidden costs associated with terminating or consolidating core technology contracts. 

  • Three companies – FIS, Fiserv and Jack Henry – now control 85 percent of the core services market - an oligopoly by any measure.

  • Many innovative bank technology products are emerging from third-party vendors in the area of mobile payments, remote deposits, cyber security, peer-to-peer payments, compliance and more.

  • Larger financial institutions – flush with profits from investment activities, insurance sales or other non-traditional banking activities – are investing heavily in innovative technologies, setting a difficult pace for smaller institutions.

This report looks forward toward the rising imperative for financial institutions to budget for and integrate the technologies they’ll need to attract and retain customers in a time of challenging but sustained economic growth.


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